As a small business owner, one of the pleasures of running your own company is dealing with tax obligations. Every company owner should make sure his or her taxes are correctly submitted. The CRA expects you to file an annual tax return.
It’s always better to deal with this situation as soon as possible so that you may take advantage of all of the tax deductions and credits available to you under the law. Because tax rules are quite intricate, we usually recommend working with a CPA to assist you in completing your taxes.
When it comes to filing your annual returns, be on the lookout for the following common mistakes list by tax accountant Toronto team that business owners make every year.
There are a plethora of deductions you could claim under the current tax system.
For example, the money you spent to start your own business, as well as interest payments on loans, can be deducted. Deductions such as salaries and wages, as well as employee benefits, might be claimed.
If you utilize your automobile for business, you may be able to deduct vehicle costs such as insurance. Don’t make the mistake of submitting too late because you won’t have enough time to check for all of the deductions that you’re entitled to.
Because of the complexity and time it takes to calculate your taxes, you may not want to do them yourself. If you’re going to pay someone else to prepare your taxes for you, make sure they understand all of the rules that apply to tax deductions. You can claim expenses that are reimbursed by another person as long as those expenses are deductible.
For example, if you have a home office, you must be meticulous when claiming it as a deduction. The area must only be used for work; that is, to host business meetings or invite clients and do business-related work. If it’s just used for part of the year for business, it won’t qualify for the credit.
You may be eligible for certain deductions, but if you don’t have the paperwork to back them up, you’ll lose out on them. Tax Accountant Toronto team recommend to make sure you set up rules for tracking spending throughout the year.
For example, set up a routine for recording all of your expenditures as soon as they take place. There’s a lot of technology available to assist you keep track of your expenses effortlessly.
When filing taxes, you must record payments that are made in return for labor. In reality, the CRA has stringent penalties for self-employed and contractor individuals who don’t disclose cash receipts. Tax Accountant Toronto team state that if you get compensated in trade, you must disclose it on your tax forms.
For example, you might have provided marketing services to a firm that offered free accounting in exchange. On your tax return, you must record the value of this service. Failing to disclose certain payments will result in interest and penalties if you do not include them on your tax form.